Travel companies could make more of an improving economy by offering credit to consumers rather than discounts, according to market research firm Mintel.
Mintel’s annual Holiday Review, published this week, notes UK holiday demand is so strong that people “with less healthy finances” still spend large amounts on travel.
Research for Mintel found 29% of those ‘struggling financially’ took an overseas holiday last year and 18% spent £1,000 or more.
The report says: “People struggling financially appear more willing to take on debt to finance a holiday…[and] this could emerge as a key growth area. There is clear demand for high-value products among hard‑pressed consumers.”
It suggests companies cater for this demand by expanding low-deposit schemes and offering credit to “encourage cash-strapped holidaymakers to purchase higher-value products”.
Mintel research analyst Harry Segal said: “Expanding payment schemes that offer low upfront costs and payments over time would help attract consumers who might otherwise hold out for a last-minute deal.” He suggested it would appeal to the 41% of consumers who would never take a holiday that left them in debt.
Segal said: “Aversion to debt provides an opportunity for brands to introduce 0% or low-interest financing options that allow holidaymakers to spread the cost of
a holiday.”
Mintel said the cost of such schemes could be offset by restricting discounts and offering credit only on products with a high mark-up. Brands could then market “on the value of repayments – for example, advertising a holiday as ‘from just £10 a week’”.
The report concedes offering credit is risky “and can harm cashflow”, but argues: “Holidaymakers would likely be more willing to purchase higher‑value products.”